Budget 2027: Implications for Employers and Employees

Budget 2027 contains a number of measures that will affect Employers and Employees, with changes to the National Minimum Wage, income tax, USC and Employer PRSI among the key developments.

For Organisations, the increase in the Employer PRSI threshold will provide some relief from rising employment costs. At the same time, the increase in the National Minimum Wage, alongside ongoing pressures from compliance and other operating costs, means that the overall cost of doing business is likely to remain challenging in 2027.

Key employment-related measures

The main measures announced in Budget 2027 include:

• National Minimum Wage: From 1^st of January 2027, the National Minimum Wage will increase by €0.79 per hour to €14.94.
• Income tax: The standard-rate income tax band will increase from €44,000 to €46,500, meaning employees may benefit from increased take-home pay.
• Tax credits: The Personal Tax Credit, Employee Tax Credit and Earned Income Credit will each increase by €125.
• Home Carer Tax Credit: This credit will increase by €100.
• USC: The 3% USC rate band will increase by €1,600 to €30,300.
• Carer’s Allowance: The income disregard will increase to €1,150 for a single person and €2,300 for a couple.
• Employer PRSI: The weekly earnings threshold for the higher Employer PRSI rate will increase from €552 to €600 in 2027. This is expected to reduce Employer PRSI costs by approximately €650–€700 per eligible employee annually.
• Cost-of-living measures: The Rent Tax Credit will increase by €150, while the Help to Buy scheme will increase by €5,000 to €35,000. A monthly cap of €550 on childcare fees will also apply for children up to senior infants.
• Skills and training: A €360 million National Training Fund skills package will be provided, including €150 million to strengthen skills resilience across the economy and support the development of skills required as AI becomes increasingly central to the workplace.
• Revenue reporting: From January, employers will have the option to continue with real-time reporting to Revenue or move to monthly returns.

Continued pressure on labour costs

While the increase in the Employer PRSI threshold will provide some welcome relief, Budget 2027 does not remove the broader cost pressures facing Organisations.

The increase in the National Minimum Wage will add to payroll costs for Employers, while Organisations continue to manage higher compliance, energy and other operating costs. The measures aimed at increasing Employees’ disposable income should provide some support for households, but the overall cost of doing business is likely to remain under pressure in 2027.

The skills investment announced in the Budget is also a positive development for Employers, particularly as Organisations adapt to changing skills requirements and the growing role of AI in the workplace.

We will continue to monitor developments arising from Budget 2027 and provide further updates as additional details and guidance become available.

Adare is a team of expert-led Employment Law, Industrial Relations, and best practice Human Resource Management consultants.

If your Organisation needs advice, support, or guidance about managing increased labour costs, workforce planning, compliance requirements or any HR issues, please contact Adare by calling (01) 561 3594 or emailing info@adarehrm.ie to learn what services are available to support your business.